SHIPPING pool agreements need to be reviewed, and possibly revised, if they
are to meet new EU regulations, warns Øystein Meland, partner at the Bergen
office of law firm Wikborg Rein
. Speaking at Shipping China 2005 earlier
this month, Meland outlined new enforcement rules which may come into effect
in 2005 or 2006 making some existing pool agreements illegal.
"A pool agreement is a horizontal agreement between competitors which may
create market dominance and increase barriers to entry. In many
jurisdictions this already makes them illegal," says Meland. "To date, they
have largely been left alone due to the positive effect they have on world
trade and lack of enforcement of the competition rules. But all that could
be about to change."
In the wake of a number of recent shipping cases, the regulators are
increasingly focused on competition in international shipping. The EU is now
looking at revising Regulation 4056/86 of the EC Competition Rules in order
to abolish the block exemption currently enjoyed by both liner and tramp
"While it is hoped that the regulators will appreciate the
important role played by shipping pools, shipowners are strongly advised to
review and possibly rewrite their shipping pool agreements as soon as
possible. Failure to do so could result in huge fines and/or civil suits,"
According to Meland, pool agreements need to be rewritten to emphasise that
the purpose of the agreement is increased efficiency and utilisation of
vessels, and demonstrate that the customer gets a fair share of the benefit.
Non-competition clauses should be minimised, particularly those that hinder
any of the pool participants from buying similar ships
to operate either on
their own or in co-operation with other operators.
"Agreements that fail to comply with the new rules could attract corporate
fines of up to 10 per cent of annual worldwide turnover on a group basis, or
up to ten years imprisonment for individuals," he warns. The new rules will
also introduce stricter filing or registration requirements leading to
increased bureaucracy and costs for owners.